Bank Negara Malaysia (BNM) requires insurers and takaful operators (ITOs) to review their current repricing strategies following concerns raised by policyholders regarding recent increases in the premiums of medical and health insurance and takaful (MHIT) products.
In a statement, BNM says that this includes managing increases in premiums/contributions over time, taking into account the impact on policy owners/takaful participants. In addition, ITOs are required to offer viable options for policy owners/takaful participants who are significantly impacted by the higher premiums/contributions to continue having insurance/takaful coverage.
ITOs must also ensure the options provided are meaningful and provide additional measures to support affected policy owners/takaful participants.
The newspaper Utusan Malaysia recently reported that medical insurance premiums are expected to rise by 40-70% next year.
Insurance industry initiatives
Addressing the concerns, the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA) and Persatuan Insurans Am Malaysia (PIAM) say in a joint statement, that they are committed to, among other things:
Staggering repricing adjustments to manage impact on customers;
Establishing a dedicated hotline for each company and relief program to ensure ease of access to policyholders:
Offering flexible premium/contribution payment plans to affected policyholders;
Offering options for different protection plans at comparatively lower or the same premium/contribution; and
Implementing effective redress mechanisms, including dedicated communication channels for affected customers.
Further details on the measures will be announced soon.
The associations also welcome the recent announcement by the Association of Private Hospitals Malaysia (APHM) on establishing a cost containment unit to manage healthcare costs. This initiative seeks to ensure healthcare services remain affordable while maintaining high standards of care.
The industry is also supportive of the Health Minister’s call for a value-based healthcare delivery system. In addition, the introduction of co-payment options in September this year offers a solution aimed at reducing premiums by sharing medical costs with policyholders and encouraging more mindful healthcare usage in the long term.
The industry says it continues to engage with BNM to manage healthcare costs.
Rising claims and medical inflation
Explaining the premium hikes, the associations said, “Over the period of 2021 to 2023, the insurance and takaful industry experienced an unprecedented cumulative medical claims cost inflation rate of 56%. This surge, driven by various factors such as the rising costs of medical treatment, advanced healthcare technologies, and increased utilisation of healthcare services, has made premium repricing an unavoidable measure.”
They added, “Although insurers and takaful operators have different repricing cycles, they typically review and adjust premiums every three years to ensure the sustainability of medical insurance plans. The accumulated impact of claims inflation has resulted in upward premium adjustments.”
Source: asiainsurancereview.com
Comments